KUALA LUMPUR: Experts believe that fuel smuggling syndicates' shift in tactics from targeting diesel to RON95 petrol is proof that targeted fuel subsidy rationalisation can have the desired impact in curbing leakages and corruption.
Economist Geoffrey Williams said it came as no surprise that syndicates were now choosing to smuggle RON95 petrol instead of diesel due to the greater scrutiny and tighter mechanisms governing the sale of the latter.
"Targeted fuel subsidy rationalisation can effectively reduce theft.
"This, coupled with the reset of registration for those eligible for subsidised diesel, has made it harder to purchase large volumes of diesel without being noticed."
Williams said a similar reset
of RON95 subsidies would not only cut direct subsidies, but also reduce wastage, leakages, and corruption.
Putra Business School lecturer Associate Professor Dr Ahmed Razman Abd Latiff said the success underscored the importance of a targeted subsidies mechanism, and that it should be extended to RON95 petrol.
He, however, said measures for RON95 should only be implemented after the government had identified and addressed all possible issues, based on the implementation.
"The potential benefits will be cost savings, but the challenge will be how to ensure all intended recipients will get the subsidies since the RON95 users number more than diesel users."
Razman said the implementation of targeted subsidies for diesel would address leakages and smuggling activities related to the fuel, in turn helping the government reduce its fuel subsidy expenditure.